GF Gaming Corp. v. City of Black Hawk

405 F.3d 876, 2005 U.S. App. LEXIS 6633, 2005 WL 896438
CourtCourt of Appeals for the Tenth Circuit
DecidedApril 19, 2005
Docket04-1177, 04-1178
StatusPublished
Cited by40 cases

This text of 405 F.3d 876 (GF Gaming Corp. v. City of Black Hawk) is published on Counsel Stack Legal Research, covering Court of Appeals for the Tenth Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
GF Gaming Corp. v. City of Black Hawk, 405 F.3d 876, 2005 U.S. App. LEXIS 6633, 2005 WL 896438 (10th Cir. 2005).

Opinion

MURPHY, Circuit Judge.

I. INTRODUCTION

Plaintiffs-appellants, consisting mainly of businesses and property owners in and around the Colorado city of Central City, sued the neighboring city of Black Hawk; Black Hawk’s mayor, city attorney, and city manager; and several casinos, associations, and individuals primarily in and around Black Hawk. Plaintiffs allege that defendants engaged in a conspiracy to restrain and monopolize trade in the limited gaming industry 1 in Gilpin County, Colorado, in violation of federal and state antitrust laws. The United States District Court for the District of Colorado granted defendants’ motion to dismiss pursuant to Fed.R.Civ.P. 12(b)(6). This court has jurisdiction under 28 U.S.C. § 1291. Because plaintiffs’ claims for injunctive and declaratory relief became moot after the district court entered judgment in this case and defendants are immune from the remaining claims for damages, this court concludes that the complaint fails to state a claim on which relief can be granted. *880 The decision of the district court is vacated as to the claims for injunctive and declaratory relief and affirmed as to the claims for damages. The district court’s decision to dismiss certain state-law claims with prejudice is also affirmed.

II. BACKGROUND 2

Pursuant to the Colorado constitution, limited gaming is permitted in the state of Colorado only in the cities of Central City, Black Hawk, and Cripple Creek. Colo. Const, art. XVIII, § 9(1). Central City and Black Hawk are neighboring towns located approximately twenty-five miles west of Denver. At the time the complaint was filed, visitors could reach Central City only by taking Highways 119 and 279 through Black Hawk. Plaintiffs allege that casino customers passing through Black Hawk on their way to Central City often faced highway construction and detours engineered by Black Hawk in an attempt to divert passengers away from Central City and into its own casinos.

To avoid the continuing loss of business to Black Hawk, Central City began planning a new highway known as the “southern access road” that would bypass Black Hawk and provide direct access to Central City from Interstate 70. A substantial portion of the area necessary for construction of the road was owned by Proland Management, LLC (“Proland”), which desired to annex its property to Central City in order to obtain municipal services. Central City began negotiating an agreement with Proland under which the property would be annexed and Proland would in turn pay for construction of the portion of the road crossing its property.

Under the Colorado constitution, municipalities may not annex land without the agreement of more than fifty percent of the landowners in the area to be annexed. Colo. Const, art. II, § 30(l)(b). 3 Proland acquired sufficient signatures to satisfy the requirements of the constitution and submitted its annexation petition to Central City. In an attempt to block Proland’s petition, Black Hawk allegedly conspired with the other defendants to purchase with public funds four mining claims located within the area of the proposed annexation. Shortly before Central City’s scheduled hearing on the petition, Black Hawk then sold undivided one-percent interests in the mining claims to fourteen individuals and business entities for $500 each. These conveyances were styled as “open space preservation agreements,” but plaintiffs allege that then- actual purpose was to create enough landowners in the *881 area of the proposed annexation to cause the percentage of landowners approving of the annexation to drop below fifty percent. The petition was thereby defeated, and Black Hawk instructed the holders of the mining claims to reconvey their interests back to the city.

The complaint further alleges that Black Hawk pressured landowner H. Thomas Winn to drop his petition to include a portion of his property in the annexation by threatening not to issue a certificate of occupancy for a casino Winn was planning to open in Black Hawk. When Winn withdrew his petition, the contiguity necessary for annexation was destroyed. Winn’s withdrawal, combined with the defeat of Proland’s annexation proposal, led Proland to abandon its annexation efforts and its offer to fund construction of the road.

Plaintiffs contend that once the road had been blocked, Black Hawk grew to dominate the limited gaming market in Gilpin County while casinos and related business in Central City fell into serious decline. A grand jury investigating the conveyances of the undivided interests in the mining claims concluded that Black Hawk’s actions violated the spirit of the Colorado constitution and election laws. The grand jury’s report also concluded that the actions of Black Hawk city officials constituted “misfeasance or malfeasance” and “misuse or misapplication of public funds.” Because the practices were not specifically prohibited by state law, however, the grand jury did not return an indictment.

Plaintiffs filed suit in the District of Colorado, raising a variety of claims under the Sherman Act, 15 U.S.C. §§ 1, 2; the Colorado Antitrust Act, Colo.Rev.Stat. §§ 6-4-104, 6-4-105; the Racketeer Influenced and Corrupt Organizations Act, 18 U.S.C. § 1962; the Colorado Organized Crime Control Act, Colo.Rev.Stat. § 18-17-104; and Colorado contract and tort law. Plaintiffs requested declaratory and injunctive relief, compensatory damages, treble damages, punitive damages, costs, and attorneys’ fees. Through a series of procedural rulings by the district court and voluntary withdrawal of some of the claims by plaintiffs, the district court dismissed all of plaintiffs’ claims except those based on federal and state antitrust law. The court then held a hearing on the remaining issues and granted defendants’ motion to dismiss the Sherman Act claims pursuant to Rule 12(b)(6). The court elected not to exercise supplemental jurisdiction over the Colorado Antitrust Act claims and dismissed these claims without prejudice. On appeal, plaintiffs challenge only the dismissal of their Sherman Act and Colorado Antitrust Act claims. 4

III. STANDARD OF REVIEW

This court reviews de novo the dismissal of a complaint under Rule 12(b)(6). S. Disposal, Inc. v. Tex. Waste Mgmt., 161 F.3d 1259, 1261-62 (10th Cir.1998). In doing so, all facts alleged in the complaint are taken as true and all reasonable inferences are indulged in favor of the plaintiffs. Cu rtis Ambulance of Fla., Inc. v. Bd. of County Comm’rs, 811 F.2d 1371, 1374-75 (10th Cir.1987).

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Bluebook (online)
405 F.3d 876, 2005 U.S. App. LEXIS 6633, 2005 WL 896438, Counsel Stack Legal Research, https://law.counselstack.com/opinion/gf-gaming-corp-v-city-of-black-hawk-ca10-2005.